Toby's Farm Store buys portable generators for $500 and sells them for $800.He pays a sales commission of 5% of sales revenue to his sales staff.Toby pays $2,000 a month rent for his store,and also pays $1,800 a month to his staff in addition to the commissions.Toby sold 200 generators in June.
- If Toby prepares a traditional income statement for the month of June,what would be his operating income?
A)$ 72,000
B)$ 48,200
C)$ 60,000
D)$160,000

Question

Quizplus · Accepted Answer

First, let's calculate the revenue Toby made in June:
Revenue = number of generators sold x selling price per generator
Revenue = 200 x $800
Revenue = $160,000

Next, let's calculate the cost of goods sold (COGS):
COGS = number of generators sold x cost per generator
COGS = 200 x $500
COGS = $100,000

Now, let's calculate the total operating expenses:
Operating expenses = rent + salary + commissions
Operating expenses = $2,000 + $1,800 + (5% x $160,000)
Operating expenses = $2,000 + $1,800 + $8,000
Operating expenses = $11,800

Finally, let's calculate the operating income:
Operating income = revenue - COGS - operating expenses
Operating income = $160,000 - $100,000 - $11,800
Operating income = $48,200

Therefore, the correct answer is B. Toby's operating income for June is $48,200.

Toby's Farm Store Buys Portable Generators for $500 and Sells